The SEC alleged that Mark Spangler, a former chairman of the National Association of Personal Financial Advisors, funneled approximately US$47.7 million of client money into these private ventures despite representing that he would invest primarily in publicly-traded securities.
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Spangler served as chairman and CEO of one of the companies, which is now bankrupt. Such risky investments were inconsistent with the investment strategies that Spangler promised his clients and contrary to their investment objectives, said the regulator in a statement.
The US Attorney’s Office for the Western District of Washington also announced parallel criminal charges against Spangler.
"Spangler assured his clients he was investing them in publicly-traded equities and bonds, not risky start-ups in which he had a personal interest," said Marc Fagel, director of the SEC’s San Francisco Regional Office.
"For an investment adviser to put his self-interest above the best interests of his clients is a disturbing abuse of trust," Fagel added.
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